Cnooc, China's largest offshore exploration firm, said it will pay $570 million for a one-third stake in Chesapeake's Niobrara Shale project, marking the second shale day between the two companies since November. Niobrara is widely believed to be one of the more oil-rich U.S. shale deposits.
Cnooc will also pay $697 million toward Chesapeake's (CHK) drilling costs. Cnooc will pay about $2,140 an acre for its stake in Niobrara and has the right to a one-third share in future acquisitions in the shale formation, according to Bloomberg News.
In November, Cnooc (CEO) paid Chesapeake almost $1.1 billion for a one-third stake in 600,000 acres in the Eagle Ford Shale in south Texas. Cnooc, which is also China's third-largest oil producer, is among the Chinese oil companies on the hunt for global energy assets. The company tried to acquire Unocal five years ago, but was turned away due to heavy political opposition.
Okalhoma-based Chesapeake, the second-largest U.S. natural gas producer, owns about 800,000 acreas in the Niobrara Shale, which encompasses parts of Colorado and Wyoming. The company said it is currently operation 16 wells on its acreage and when completed, those wells should produced 1,000 barrels of oil and 3 million cubic feet of natural gas per day. The deal is expected to close in the current quarter.